Hedge Fund Indices
There are many indices that track the hedge fund industry, and these fall into three main categories. In their historical order of development they are Non-investable, Investable and Clone.
In traditional equity investment, indices play a central and unambiguous role. They are widely accepted as representative, and products such as futures and ETFs provide investable access to them in most developed markets. However hedge funds are illiquid, heterogeneous and ephemeral, which makes it hard to construct a satisfactory index. Non-investable indices are representative, but, due to various biases, their quoted returns may not be available in practice. Investable indices achieve liquidity at the expense of limited representativeness. Clone indices seek to replicate some statistical properties of hedge funds but are not directly based on them. None of these approaches is wholly satisfactory.
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Famous quotes containing the words hedge and/or fund:
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For honor travels in a strait so narrow,
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For emulation hath a thousand sons
That one by one pursue. If you give way,
Or hedge aside from the direct forthright,
Like to an entered tide, they all rush by
And leave you hindmost.”
—William Shakespeare (1564–1616)
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—Daniel Goleman (20th century)